The flow of Russian gas resumed to Germany after a 10-day outage to ease Europe's supply concerns for now, helping to ease worries about fallout on the economy.

The euro edged up, distancing itself further from last week's parity against the greenback, the recovery bolstered by expectations the ECB might deliver a big 50 basis-point rate hike.

Russian President Vladimir Putin has warned that supplies could be reduced further or even stop, prompting the European Union to tells its members to cut usage.

"European markets are going to be pulled and pushed by Putin's mood," said Michael Hewson, chief markets strategist at CMC Markets.

Markets are looking to see how much the ECB will raise interest rates later at 1215 GMT on Thursday, with a 25-bps hike already price in, Hewson said.

Traders also await details of an ECB tool to contain stress in bond markets, made all the more urgent by a crumbling government in Italy, one of the euro zone's most indebted countries.

Rate hikes from the US Federal Reserve next week and from the Bank of England in August are also well anticipated by now, Hewson said.

The STOXX index of 600 European companies was off 0.4 per cent. The MSCI All-Country stock index eased 0.14 per cent.

Italian bonds sold off sharply following the collapse of Mario Draghi's government in the euro area's third biggest economy.

Nadege Dufosse, head of cross-asset strategy at Candriam, said political turmoil in Italy is putting more pressure on the ECB to have its so-called anti-fragmentation tool in place to cap bond yields and reassure markets.

"I think they will have to deliver on that point, I think it's the main risk today. It must convince investors that it will be efficient," Dufosse said.

After the latest series of rate hikes, investors will be trying to gauge whether the economy is headed for a soft or hard landing as higher borrowing costs are absorbed, she said.

"It's the expectations for the fourth quarter or next year that can really determine the trend in the market. For now we do not have the answer and we just have to be very pragmatic," Dufosse said.

Bucking the trend, the Bank of Japan left monetary policy unchanged on Thursday, as expected, and raised its inflation forecasts a little bit. The yen held steady at 138.37 per dollar.

Nasdaq 100 futures fell 0.25 per cent and S&P 500 futures fell 0.2 per cent. Earnings from Blackstone, Dow Chemical, Philip Morris International, Twitter and American Airlines were due on Thursday.

Wall Street indexes rallied overnight but even better-than-expected results from Tesla after hours couldn't carry the positive mood into the Asia session.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1 per cent and Japan's Nikkei gained 0.4 per cent.

A cloud over Chinese growth due to its strict COVID-19 controls and fresh concern over the ailing property market is also casting gloom over the prospects for global demand.

Growth-sensitive commodities such as copper and iron ore have been sliding and this week Chinese banks and property stocks have been hurt by borrowers boycotting mortgage payments on unfinished homes.

"Past due mortgages doubled over the week, and ... potential home buyers are waiting for a general drop in home prices for the housing market, including completed projects," ING analysts said in a note to clients on Thursday.

"This is negative even for cash-rich developers."

China's yuan was slightly firmer at 6.7664 to the dollar. Against other currencies the greenback steadied after dipping earlier in the week. The Australian dollar bought $US0.68650 ($A0.99670).

The benchmark 10-year Treasury yield held at 3.0415 per cent, below the two-year yield of 3.2359 per cent, a market signal that often presages a recession.

Oil prices fell for a second straight session, as demand concerns outweighed tight global supply after US government data showed tepid petrol consumption during the peak summer driving season.

Brent crude was down 2.25 per cent at $US104.50 ($A151.71) a barrel, while US West Texas Intermediate dropped 2.6 per cent to $US97.32 ($A141.29) a barrel.

Australian Associated Press